Workers underpaid by firms renovating fancy mid-Market offices

Union members from San Francisco Carpenters Local 22 were distributing flyers outside a developer’s Bush Street headquarters this week, upset that the company hired contractors who don’t pay union scale wages. "Hurting workers!" The bright orange flyers screamed. "Shame on them!"

The developer is Group I, headed by Joy Ou. In addition to being the CEO of the development firm, Ou is also listed on state licensing records as the principal officer of Construction Studios, Inc., one of the general contracting firms singled out on the flyer. Ou did not return Guardian calls seeking comment.

Group I is conducting office renovations at 988 Market Street, a 1920s-era building located at Sixth and Market streets adjacent to the Warfield Theater. Group I purchased the Warfield office building from David Addington. It is a prominent location: when Mayor Ed Lee ran for election in 2011, his campaign office was headquartered there. The building is also included among mid-Market properties eligible for payroll tax exclusion under a program hashed out in 2011 to revitalize the central Market corridor.

Of the multiple floors under renovation, two will house Benchmark Capital, a venture capital firm that invests in tech startups. Tech startup companies are poised to move in just below. It’s unclear whether these businesses will apply for the payroll tax break.

According to Bill Gerber of Tico Construction Co., a contractor tapped to conduct some of the renovations, the workers he’s hired actually are earning union-scale wages. “Tico is running it as a union job,” he said. “We are paying area wages.”

But Scott Littlehale, a spokesperson for the carpenters’ union, told the Guardian that Gerber never responded when the union asked him if Tico pays area standard wages on all jobs. “What we believe is that the developer in this case, Group I, has not required its contractors to pay area wages all the time on all its jobs,” Littlehale said. “This is a labor market that extends beyond a single job site.”

Under California law, workers employed on city-funded projects must pay the prevailing wage, which is $38.50 an hour for carpenters before benefits are factored in, according to the Department of Industrial Relations. Since 988 Market is not a publicly funded project, it’s not bound to this requirement.

Nevertheless, the idea that construction crews are working for less than the area standard in San Francisco's burgeoning economic climate – to renovate space for a venture-capital firm that will qualify for a payroll-tax exclusion – raises questions about whether this kind of development is actually helping struggling workers recover from the economic hit of the last several years. Group I stands to make top dollar by renting its office spaces out to tenants heavily invested in the booming tech industry. Meanwhile, San Francisco is becoming increasingly unaffordable for skilled laborers.

Construction gigs are temporary by nature, and Littlehale said many union members earn less than the area median income. “Construction work had been a pathway to fairly stable middle class standards, and that’s under threat,” Littlehale said. “The big picture is: We’re going to hold the folks up the food chain accountable.”